PulteGroup (PHM) Q2 2024 earnings summary

Executive summary

• Q2 2024 earnings per share rose 19% to $3.83, with net income up 12% to $809 million, driven by higher closings, average sales price, and gross margin.

• Home sale revenues increased 10% to $4.4 billion, with 8% more closings (8,097 homes) and a 2% higher average sales price of $549,000 year-over-year.

• Demand was less consistent than Q1, with some markets experiencing increased inventory and buyer caution due to affordability and interest rates.

• Net new orders declined 4% year-over-year to 7,649 homes, with backlog at 12,982 homes valued at $8.1 billion.

• Maintained focus on liquidity, shareholder returns, and disciplined capital allocation amid evolving market conditions.

Financial highlights

• Gross margin improved by 30 basis points to 29.9% year-over-year and sequentially, aided by favorable mix and reduced incentives.

• SG&A expense was $361 million (8.1% of revenues), including a $52 million pre-tax insurance benefit.

• Financial services pre-tax income increased 36% to $63 million, with a mortgage capture rate of 86%.

• Effective tax rate for Q2 was 22.8%, reflecting a $13 million state tax benefit.

• Cash and equivalents at quarter-end were $1.4 billion; debt-to-capital ratio improved to 12.8%.

Outlook and guidance

• Expect to close 7,400–7,800 homes in Q3 and approximately 31,000 homes for the full year.

• Average sales price guidance for Q3 and Q4 remains $540,000–$550,000.

• Gross margin expected at ~29% in Q3 and 28.5%–29% in Q4, reflecting less favorable mix and increased incentives.

• Multi-year growth target of 5%–10% remains intact for 2025, with long-term volume growth supported by land investment.

• Management expects long-term demand to benefit from a structural housing shortage despite short-term interest rate impacts.